As we are approaching a milestone in the history of Hong Kong - the 10th anniversary of the establishment of the Hong Kong Special Administrative Region - we are encouraged to see a continuing thriving economy.

The real GDP growth of 6.8% last year marked the third consecutive year of distinctly above-trend economic growth in Hong Kong.

Merchandise exports attained another year of double-digit growth, while service exports were likewise robust. Meanwhile, overall investment picked up for the fourth year in a row, attaining an 8% growth in 2006, signifying strong business confidence.

The strong economic upturn has put the economy on a much sounder footing - with rising consumer confidence. Domestic demand is thus likely to be an important driving force of our future economic growth.

Looking ahead, we expect another year of broad-based economic upturn in 2007, with GDP growth forecast at 4.5%-5.5% in real terms.

The distinctive history of Hong Kong and the innate ability of Hong Kong people to seize opportunities have shaped the unique role of Hong Kong as the most cosmopolitan city in China, and also as Asia's world city.

Over the years, the thriving Mainland economy has provided ample business opportunities for Hong Kong, and our linkages will only get wider and deeper as we progress.

According to the International Monetary Fund, China had the world's fourth-largest GDP in 2005. In the next five years, China's annual real GDP growth is projected to be 7.5% and the per capita GDP is expected to reach US$2,400 by 2010.

Economic relations between Hong Kong and the Mainland have grown in both breadth and depth, not only in terms of trade and investment, but increasingly also in the movements of people and capital.

The strategy of leveraging on our fast-growing economic hinterland will continue to pay off. The nNational 11th five-year plan has given clear support for Hong Kong's development of its services industries such as financial services, logistics, tourism and information services; and the maintenance of Hong Kong's status as an international financial, trade and maritime centre.

This recognises our dominant industries and their important function in the process of Mainland's development.

It would be incumbent on us to work hard to consolidate our strengths and strive for the best. The Government treasures your valuable advice and insights on how Hong Kong should position itself to leverage the vast economic opportunities arising from our unique role vis-a-vis the Mainland economy.

The collective wisdom of the business community has been tapped in the context of the economic summit on "China's 11th Five-Year Plan & the Development of Hong Kong".

This has crystallised into an action agenda, comprising 50 strategic proposals and 207 action items, which aims to strengthen the international and regional competitiveness of Hong Kong and provides important reference for our economic strategy.

The relevant bureaux are now studying these recommendations in detail and pushing ahead with those proposals that can be launched in the first half of this year.

The business community has also been active in developing stronger cooperation and communication links with the Mainland, such as the Pearl River Delta Council under the Federation of Hong Kong Industries.

With more business-related exchanges between Hong Kong and the PRD on issues like investment, technology and research, product development and intellectual property protection, I am confident that we will together reach new heights.

The federation will no doubt play a significant role in the current endeavours, just as you have been doing so for almost half a century. Among your efforts, I would like to highlight one particular area, which is a hot topic and is of interest to everybody - environmental protection.

There have been broad discussions of business corporate responsibilities in recent years. The need to create a sustainable environment for our future generations calls for a fundamental change in the mode of operations in the more than 60,000 Hong Kong-owned factories in Guangdong.

But challenges also bring with them opportunities, especially for the environmental-protection enterprises. Green manufacturing is the inevitable trend nowadays.

The federation has been a pioneer in propagating the concept of clean and green manufacturing to our industrialists.

The Green Mark Certification Scheme newly launched by the Hong Kong Green Manufacturing Alliance and the "One Factory - One Year - One Environmental Project", or 1-1-1, programme organised by the federation are some of the good examples.

With funding support from the SME Development Fund, the federation has set up a business facilitation and incubation centre for SME manufacturers in Hong Kong and Pan Pearl River Delta to enhance environmental excellence.

The encouragement of industrial innovation will introduce green compliant standards at the heart of the manufacturing processes and products.

It also stimulates a new culture of green practices that runs through the chain of industrial processes. These will enhance the competitive edge of our manufacturers, which are facing increasingly environment-conscious markets.

Financial Secretary Henry Tang gave this address at the annual dinner of the Federation of Hong Kong Industries.